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Commodities: Crude Oil Rebound May Falter as Earnings Enter Spotlight

The recent recovery in crude oil prices may unravel as traders tune into the beginning of the corporate earnings season for guidance on risk appetite trends.

Talking Points

Oil Rebound May Unravel as Sentiment Looks to Q4 Earnings for Direction

Gold and Silver Prices Find De-Facto Support as US Dollar Corrects Lower

Sentiment-linked crude oil is on the upswing along with a narrow improvement in risk appetite in European hours, with regional shares edging higher. Gold and silver are likewise trading higher as the US Dollar corrects lower, offering de-facto support to anti-fiat assets. Copper is little-changed.

All eyes are on the US earnings calendar, with reports from cycle-sensitive Alcoa Inc and Monsanto Co in focus. Traders will be looking for the companies’ guidance to help shape the outlook for global demand heading into 2013, which may prove formative for risk appetite. S&P 500 futures are little-changed ahead of the opening bell on Wall Street, hinting investors remain non-committal for the time being.

WTI Crude Oil (NY Close): $93.19 // +0.10 // +0.11%

Prices put in a Hanging Man candlestick below resistance at 93.25, the 100% Fibonacci expansion, hinting a move lower is ahead. Near-term support is in the 91.23-92.01 area, marked by the 61.8% and 76.4% Fibs respectively. This barrier is reinforced by the formerly broken top of a rising channel top set from early November.A drop below 91.23 exposes the 90.00 figure. Alternatively, a reversal above 93.25 aims for the 123.6% expansion at 94.51.

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Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1646.95 // -8.70 // -0.53%

Prices reversed lower from resistance at a falling trend line set from late November, taking out support at the 38.2% Fibonacci expansion (1649.37). Sellers now aim to challenge the 50% level at 1635.24. A drop beneath that aims for the 61.8% expansion at 1621.55. The 1649.37 level has been recast as resistance, with a reversal back above that targeting the 23.6% Fib at 1666.86.

Prices reversed sharply lower from support-turned-resistance at the bottom of a falling channel set from late November (31.15), with sellers now testing the 38.2% Fibonacci expansion at 29.64. A break below that targets the 50% level at 29.07. Near-term resistance is at 30.33, 23.6% Fib.

Prices are testing below support at 3.680, the 50% Fibonacci expansion. A break below that targets the 38.2% level at 3.643. Near-term resistance is at 3.718, marked by the 61.8% expansion, with a reversal above that aiming for the 76.4% Fib at 3.764.